I recently had a very lively conversation with my friend and colleague Kevin Kim on his Lender Lounge podcast. We covered a lot of topics related to the current state of the private lending industry, talked a lot about where we see things going in the near future, and discussed how Encore’s business model took shape.
You can watch the interview here or listen on Apple podcasts. Below are some of the highlights from our conversation:
How a combination of commercial, residential, and securitization expertise shapes the way Encore Finance operates
Encore takes a unique approach that uses elements of commercial loan structure to address opportunities in the residential market. This approach is key to creating loans and assets that fill important needs in the current market.
Why I started Encore Finance amid such a challenging rate environment
In short, there is still a need for creative and innovative lenders to positively impact this space. Our niche has yet to fully mature and come into its own, and our clients are counting on us making that happen.
Why it’s more important today than ever to match loan products with the right capital sources
When capital was flowing more readily, it was easier to find a one stop shop to fund all of your various asset classes. Investors today have much narrower outcome requirements, meaning you need to do a lot more work to match the right capital with the right product.
The challenge of making a “bespoke” loan model both scalable and profitable
Encore brings the bespoke model of commercial loans to the residential space, allowing for products that really fit the current market’s need. The clear challenge here is retaining scalability and profitability. Technology is a big part of the equation – particularly the ability to streamline processes and improve efficiency.
Control isn’t everything when considering a capital partner
The reality is that if you as an entrepreneur are seeking a capital partner, you’re negotiating on uneven ground: they have the money and you don’t. That means you’re likely going to give up some control, and that’s okay. It’s often better to go for alignment rather than fixating on retaining contractual control in terms of voting rights. Alignment will tend to create better partnerships and is likely to take you farther and get you better results in the long run.
A better way to think about securitization
Some in the lending space think of securitization simply as an offloading of risk. I prefer to think of it as a very attractive financing vehicle. This encourages better structures that benefit buyers and sellers, build a more reputable brand, and create stronger long-term relationships.
You can watch the full interview here or listen on Apple podcasts.
One of the greatest compliments that a speaker can receive is to be told they “owned the room.” The first time I was told I had owned a room it came as a bit of a surprise, since that wasn’t my conscious intention.
Yet it wasn’t an accident either. Speakers who own the room almost always share certain notable qualities. To start with, they tend to project confidence without ego and come across as authentically relatable.
I wrote a blog a few years ago about how anyone can adopt this same approach and be the kind of speaker who draws in the audience and creates a real connection. Here are the three steps I laid out to being a speaker who owns the room.
Know Your Audience
Understand who is there and what their point of view might be. Use that understanding to anticipate the pain points in their business that you can address directly. Read their body language just like you would at any social event. And finally, allow yourself the room to be flexible and let the speech or the discussion flow instead of rigidly sticking to your script.
Share Your Story
Authentic stories, especially personal stories, are the best way to be relatable and draw people into a shared vision. By all means, edit your stories to protect the innocent, but honor the truth of the story. If you put yourself in the story with honesty and vulnerability, other people will often put themselves in it too.
Be Prepared
The people who sound the most natural are often those who are best prepared. They usually have enough prepared remarks to feel comfortable going off script without worrying about being caught off guard or running out of coherent thoughts. It’s a good idea to always know your numbers and to have at least a few stats handy to support your anecdotes. Nothing is more convincing than a compelling story that is backed by numbers.
The original article is available here.
Many professionals make the mistake of thinking their expertise and the technical skills of their trade will be enough to help them advance throughout their careers. However, at some point nearly all of us find out that certain intangibles are just as important.
A few years ago I wrote a blog post about the importance of being “bankable.” What does being bankable mean? You’re bankable to the extent that you’re a known and trusted figure to people both inside and outside your organization. It largely comes down to how many people you have in your network who will go to bat for you.
This is an especially important trait in the lending industry, where there are very few if any senior positions that are strictly internal. It’s nearly impossible to reach the upper executive seats if you don’t have bankability.
Becoming bankable is something that takes time and consistent effort, and the tips I gave in my original blog are still relevant today. Here is a summary.
Thought Leadership
Becoming a thought leader is not as daunting as it sounds. The key is to devote weekly time to building your reputation so that it becomes part of your routine.
Here is a short blueprint for becoming known as a go-to thinker in your field:
Always have your antenna up
Pay close attention to what those around you are saying. Pick a few industry blogs and/or newsletters, read them religiously, and take time to reflect on what you’re reading. Stay on the lookout for emerging trends, especially thorny challenges that remain unaddressed.
Refine your understanding
When you find a topic of interest that you think you can weigh in on, talk to people inside your organization and refine your thoughts. When you’re ready, test out your ideas by commenting on LinkedIn posts and online articles to gauge others’ reactions and gather feedback.
Push your ideas out gradually
Once you’re comfortable with your evolved position on the topic, gradually push your ideas out externally. Start small with tweets and LinkedIn posts, then get bolder and take your ideas to bigger forums over time. Pretty soon, people will be seeking you out for your opinion.
Public Speaking
Eventually you want to be speaking at conferences and other large events, but this is probably not the best place to start. Here are some ideas to build your reputation in the meantime.
Start inside your organization
There are plenty of ways to speak within most organizations. Here are a few ideas:
- Go to HR and offer to do a “lunch and learn” for junior employees
- Volunteer to organize a few weeks of content for summer interns, and consider inviting guest speakers you’ve always wanted to meet
- Join your company’s on-campus recruiting team and speak to prospective hires about your industry
- Consider volunteering to interview people internally
Then, start venturing out
- Consider hosting webinars for clients on themes from your lunch and learn sessions
- Choose a topic from your recruiting efforts and record a video for the HR onboarding team to use with new hires
- Publish webinar ideas and video clips to social media platforms and your company blog
The great thing about video is that it has a long shelf life. Repurposing the videos you’ve recorded across the internet will likely result in speaking invitations.
Personal Branding
Like the above areas, personal branding takes time to build, but it’s worth the effort. Here are a few tried and true strategies:
- Publish content that is strong and in your own voice, but don’t be afraid to learn from the approach of established leaders
- Patiently and consistently build your network in concentric circles: start by engaging with colleagues and industry connections you know well, and then move on to industry leaders whom you don’t know well or at all.
- Look for opportunities to help other people and you’ll be rewarded in turn
- Branch out into the community and speak to non-industry groups
Become known as someone who not only has interesting ideas, but is eager to share. That’s the kind of person that every organization wants at the top.
The original article is available here.
Back in March 2020, I was interviewed by the Originate Report Team at Geraci Law Firm about my experience as an entrepreneur. Specifically, what lessons I had learned and what I would pass along to other entrepreneurs at the beginning of their journey.
I recently came across the original article posted on the Geraci website, and I was musing about how I would answer the same questions today. While there would be a few tweaks here and there, for the most part my answers would be very similar.
Here are the Cliff’s Notes from that interview. The original article is linked at the bottom.
How I knew I had the right idea with my first business:
I knew because I interacted with my market face to face. My first lending business was AuctionFinance.com. I went to the live auctions and checked in the bidders at the registration table. After just a few days of counting the cashier’s checks as people came in, I knew exactly how much cash was in the room and exactly what I could do to help the bidders.
The best and worst pieces of advice I’ve ever received:
Best: Don’t be afraid to fail.
Worst: Try not to fail.
What I’ve learned from failure:
That failure is fine, but you need to have the ability to pivot quickly when things don’t work out as planned (and they never really work out exactly as planned).
How I built the customer base for my early ventures:
Going to where the customers are and talking to them. There is no substitute for being a great listener. Really engage with them and think critically about how you can address their problems.
The most difficult part of my startup journey and how I worked through it:
I’m pretty methodical and conservative about building a business sustainably. I never want to get too far out over my skis. This was hardest when I watched some of my aggressive competitors building much faster than I was. But I was able to stick to my guns, and in the end it worked out much better for me – I never went through the pain those competitors did of closing doors and laying people off.
My favorite aspect of being an entrepreneur:
Making decisions and watching them play out. There is so much pleasure in setting destiny!
My advice to someone starting their first business:
Make sure you are addressing a real need and listening to your clients along the way.
My typical day:
I don’t have one! That’s the best part.
Original interview is available here.
Encore Finance is thrilled to have attended the 10th Annual Build-To-Rent, Land & Homebuilding Forum of the West. We gained valuable insights into the evolving real estate landscape:
- The enthusiasm that once permeated the asset class has given way to a more discerning approach among investors. They’re becoming highly selective when it comes to choosing projects, sponsors, and markets. One key factor driving this shift is the expectation that interest rates will remain “higher for longer.” Market participants are adapting by recalibrating their return models to embrace this new normal.
- Operating expenses, notably property insurance, are on the rise. This upward trend is putting pressure on pro-forma cash flows, challenging the financial viability of many projects. However, amidst these challenges, there remains a strong sense of optimism surrounding the Build for Rent (BFR) asset class. 🏘️
- What sets BFR apart? It’s a naturally supply-constrained asset class due to its low density. Moreover, the increasing cost of homeownership is driving a surge in demand for rental homes, creating a favorable supply/demand equilibrium.
Encore Finance believes in the resilience and potential of the BFR asset class. We’re excited to be part of this dynamic industry and look forward to working alongside our partners to navigate these changing dynamics.
